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As Congress prepared to vote Monday after agreeing on a much-anticipated $900 billion COVID-19 economic relief measure to follow up last spring’s round of stimulus measures, solar power contractors in Arkansas were calling tax incentives and other provisions of the plan a boost for the renewable power industry.
The bipartisan agreement is part of a $1.4 trillion omnibus spending bill for 2021, and along with well-publicized details like $600-per-person stimulus checks and unemployment insurance extensions, it offers an extension of tax breaks on renewable energy production and investment in renewable energy projects like home, business and utility-scale solar power arrays.
The legislation, hailed by Senate Majority Leader Mitch McConnell as a “bipartisan breakthrough the country has needed,” slows a phaseout of the tax benefits. At the end of this year, the investment tax credit had been scheduled to fall from 26% to 22%, and to fall off a cliff at the end of 2021, offering just a 10% incentive for commercial projects only.
The agreement extends the PTC for one year and the investment credit for two years.
Bill Halter, the former Arkansas lieutenant governor who is CEO of Scenic Hill Solar of North Little Rock, called congressional agreement on the solar investment tax credit “unambiguous good news for Arkansas,” and hailed its bipartisan backing.
“Members of Congress are providing financial support and additional certainty to the development of solar power plants at a time of economic uncertainty and too-high unemployment,” Halter told Arkansas Business in a telephone interview.
He said Arkansas will benefit particularly “as we are in the top 10 states in the country for the amount of sunshine we receive and we have abundant land.”
All Arkansas ratepayers will benefit, he said, “if we can just overcome continued utility resistance” to solar power projects under net metering interconnections. Net metering allows Arkansans who put renewable electricity onto the grid to get something close to a one-to-one credit generally equal to what utilities like Entergy Arkansas charge for retail power.
“Of course we’re pleased to see that the solar tax credits will be extended,” said Nick Gorden, co-founder and CEO of Shine Solar of Rogers, a multistate installer of solar arrays. “This will allow even more Arkansas homeowners and businesses to realize the benefits of being able to use clean solar energy to save money as well as live and work more independently.
Gorden added in an email to Arkansas Business that the incentives will “help fuel the growth of our industry in the state and create more jobs to meet demand.” Matt Bell, a principal partner in Little Rock efficiency and solar contractor Entegrity, said his firm was still digging into the details, but agreed that “there are some good provisions regarding the extension of the ITC and in making the 179D deduction for energy efficiency in buildings permanent.”
The Section 179D tax deduction, which Congress originally passed as part of the Energy Policy Act of 2005, promotes power conservation in U.S. buildings, which account for 73% of all power consumed in the nation, according to the Department of Energy. Under the law, building owners are allowed to deduct up to $1.80 per square foot for energy-efficient buildings that have undergone improvements in HVAC, efficiency lighting or the building’s envelope.
House Speaker Nancy Pelosi and Senate Minority Leader Chuck Schumer addressed several energy and climate-related provisions in a press statement Sunday night.
“The agreement includes sweeping clean energy reforms, R&D enhancements, efficiency incentives, and extends clean energy tax credits to create hundreds of thousands of jobs across the clean economy,” they wrote. “The package also phases out superpollutant HFCs, positioning the U.S. to lead the world in avoiding up to 0.5 degree Celsius of global warming,” they said.
Along with extending the 179D deduction for commercial buildings, the deal extends efficiency incentives through 2021 and extends carbon-capture incentives.
New Solar in Springdale
As Arkansas’ representatives in Washington prepared to vote, news of a major solar power “park” broke as Ozarks Electric Cooperative of Fayetteville announced a partnership with Today’s Power Inc. of North Little Rock to supply sun power to supply clean power to schools, the city of Springdale and the cooperative’s telecommunications subsidiary, OzarksGo LLC.
Today’s Power, a wholly owned subsidiary of Arkansas Electric Cooperatives Inc., will build, own and operate a 2.7-megawatt solar facility to power Elkins Public Schools, Lincoln Public Schools, Springdale’s municipal government and OzarksGo.
The park, on 25 acres near Lincoln (Washington County), will be Ozark Electric’s third large-scale solar project and will include about 7 megawatts of energy storage that the cooperative hopes to harness to control wholesale demand charges in power-hungry times, mostly in summer.
Springdale, the schools and OzarksGo will receive lower-cost electricity while avoiding upfront costs through a third-party leasing mechanism and an integrated approach to acquiring the land, Ozarks Electric said.
“The collaboration with Today’s Power allows Ozarks to optimize its grid and substations by strategically placing the solar park in an area to assist load management,” the cooperative said in a news release.
OzarksGo offers cooperative members all-fiber gigabit Internet and premium television and telephone services.
“As technology and innovation in the renewable energy sector continue to grow, Ozarks believes that renewable energy will be an increasingly important part of our member’s lives,” said Mitchell Johnson, Ozarks Electric’s CEO, in a company statement. “We are pleased to partner with Today’s Power to provide solar solutions for our members.”
The solar park will bill the schools, city and OzarksGo separately under a solar power service agreement. Today’s Power will build, staff and maintain the solar park, predicting savings for the entities of more than $3 million over 20 years.
Planning and engineering have begun, and a groundbreaking ceremony is planned for early next year, with completion expected by June.
TPI has built 30 renewable solar energy systems, including 14 specifically for Arkansas’ distribution cooperatives.
“Two additional systems were installed in collaboration with the distribution cooperative and the end user, their member, and another two systems were installed in partnership with an Arkansas electric cooperative and a member, which incorporated on-site battery power storage,” Today’s Power spokeswoman Jennah Denney told Arkansas Business on Monday. “The remainder of TPI’s projects in service have been for commercial or public sector clients in Arkansas, Oklahoma and Tennessee.”
The company has five additional projects in the engineering and design phase, all to be installed in Arkansas, Denney said. It also has “23 separate solar facilities in the state of Kansas in various stages from engineering to construction.” Those projects are all for electric cooperatives in those states, she said.
“The battery energy storage system brings value to all Ozarks Electric Cooperative members, whether or not they are a solar park participant,” Denney said, noting that the storage system will be on-site and ready to cut the cooperative’s peak energy demand, usually in June through September, “when solar power systems produce at their full capacity.”